"With general revenues holding fairly flat, we are being forced to look closer than ever at what services we offer, how we offer them and how we can fund them," Poynton said. "We are operating leaner than we were a decade ago, yet providing more services. We can't do that forever."

During the annual address Tuesday, Poynton provided a snapshot of the issues and initiatives affecting Lake Zurich government to a full house of more than 50 people, including village officials and residents, who gathered inside the police department's community meeting room.

After Poynton and Village Manager Ray Keller addressed the crowd, local officials answered questions about village projects, programs and policies for about 45 minutes.

Poynton warned that the state legislature and its own budgetary challenges continue to threaten key revenue sources, which Lake Zurich has relied for decades.

In particular, Illinois officials now are charging the village a 2-percent administrative fee to collect and disburse its non-home-rule sales tax revenue, he said.

"That 2 percent equates to roughly $40,000, almost the equivalent of our entire Emerald Ash Borer tree re-planting program," Poynton said. "For us, this is the equivalent of a tax on a tax and it diverts even more resources from local governments up to the state government."

Michael Schmidt / Pioneer Press

Lake Zurich Village President Tom Poynton addresses residents during the village’s “State of the Village” program inside the Lake Zurich Police Department.

Despite the issues with the state, Lake Zurich residents appear to be pleased living in the village, he said.

In a community survey conducted last year, 95 percent of the residents who responded rated Lake Zurich as an excellent or good place to live, while 96 percent of respondents would recommend the village to other people and 97 percent called it an excellent or good place to raise a family, Poynton said.

Meanwhile, 83 percent of respondents rated the municipal services provided by village staff as excellent or good.

"We are proud of these figures, as they affirm that as a result of the culture change we have undertaken, we are making the right decisions and moving in the right direction, becoming even more transparent in the process," Poynton said.

Since it was created more than four years ago, Lake Zurich's long-term strategic plan has guided the efforts of village board members and staff, Keller said during his address.

As part of that process, Lake Zurich officials have carefully analyzed the village's limited resources during their annual budget process, Keller said.

In the 2018 budget, the village dedicated $28 million to general operations, $11 million to water and sewer expenses and $9.4 million to capital projects, including $260,000 for an ambulance and $185,000 for a public works truck, he said.

"We did our best to work within our means and put together a budget with a modest general fund balance," Keller said.

During the event, several residents, including former Lake Zurich Trustee Jeff Halen, asked about the status of the village's analysis gauging the possibility of bringing Lake Michigan water to the village.

Public Works Director Mike Brown said officials continue to evaluate all options.

"Most importantly, we need to evaluate what partners are out there to offer Lake Michigan water," Brown said. "We are working behind the scenes, but we don't have any substantial information for the public yet."